Why I don’t listen to economists.
A question: What field of study still operating today has wrought the most destruction? The closest answer to hand would be physics, the discipline responsible for splitting the atom. I can testify to a chill crawling up my spine upon seeing horizon to horizon of the Kazakh Steppe still shattered and broken nearly 50 years after its bombardment by nuclear tests. It was the same chill I felt on inspecting the ghostly decaying ruins of Pripyat, the town emptied of its 50,000 Soviet citizens after the core meltdown in Chernobyl. Others may point to Political Science and the great Totalitarian regimes and their unimaginable cost. Yet I would counter that political regimes are not justified through Political Science. It is the other way round.
Right now, however, the clear winner would be Economics. It’s destruction is less spectacular than a nuclear blast but over time it has incurred (and justified) wrought havoc on a scale that make other disciplines pale. Just tally up the net environmental destruction, human dislocation, war fought over resources for market, the death from privatised health systems and corporate lobby groups undermining the democratic process. The accounts begin to mount.
If there is a oil spill in the Gulf of Mexico, or the price of lifesaving medication is increased five-fold, how fair is it to blame economic theory?
With the fall of the Berlin Wall, the results of the great experiment were in. West Germany was thriving, abundant with material wealth, while its fusty Eastern Socialist version was poor by almost any economic indicator. Free-market capitalism became a moral force for its ability to bring the middle class prosperity and raise the poor out of poverty. Economic theory now had political cache and politicians in Western democracies were quick to capitalise.
The slew of privatisations in the 80s and 90s of national industries and the banking sectors in the UK, US and Australia are a prime example of political opportunism. The promises delivered by free-market economic theory were these inefficient entities rife with union issues, could operate far more efficiently as corporations. Politically this was convenient because it destroyed unions, the largest concentration of collective political power that might hold politicians to account. Through privatisation came the creation of immense corporate juggernauts - big banks, insurance, private healthcare. Industries that had formerly been answerable to the entire voting population, were now answerable to another group, shareholders with the primary drive of making profit.
Economic theory let the beast out of the cage. It provided the political justification to remove regulations and safeguards that restrained the way money operated. Once corporations reached a critical size they could wield significant political power. From here FTAs arrived, justified by ‘trade is always good’ economics. This allowed the development of the immense multinational corporations we see today. These have become supranational entities, which means they can operate outside the jurisdiction of any one government and so are beyond democratic control.
We allow Physicists a degree of naivete about how their ideas would be exploited and misused. We do this for the simple reason is because we assume they are nerds (in the technical sense of the term). They have become brilliant in a very specific field at the cost of broader awareness. A nuclear physicist is let off lightly for not foreseeing the social consequences of the nuclear bomb, because they are chasing the solution to a problem that has become detached from its real-world applications. When physicists realised what they have done they often attempted to atone for their sins. Take Einstein’s intense regret over suggesting a nuclear bomb to Roosevelt or Soviet nuclear physicist Andrei Sakharov switching to a political dissident after a crisis of conscience developing the Soviet nuclear arsenal.
The same cannot be said for economists. Unlike physicists, economists are far quicker to make claims about the good their theory may do for society, theories like trickle-down economics. And all this without the rigour of science: unlike physics or chemistry you cannot repeat an economic experiment and be guaranteed the same results.
Like other disciplines economics uses jargon to express domain specific ideas. It has the nice side effect of giving the whole operation a gloss of prestige. How well earned is this prestige? A climate scientist knows the amount of carbon that will lead to a temperature increase of 2 degrees, yet an economist doesn’t know when the next market crash will arrive. In the face of such stark ignorance and repeated failure of almost every economic theory - big words appear as a clever marketing exercise for a profession, a way to obscure rather than illuminate.
In the end there needs to be a moment of reckoning for economics. The invisible hand has broken free of its restrains and is smashing everything within sight. There still doesn’t seem to be any responsibility taken by economists. Ideas like Joseph Stegliz’s that economic inequality is bad for growth, are convenient for the field because they provide an economic foundation for what broad swathes of the non-economists consider good for society. Instead any claim made by economic theory, especially those that burst the banks of the discipline and claim to be “good for the world” needs to be treated with the utmost scrutiny before we leap into their void.